As well as pay rises and promotion, other benefits cited by MBA holders include access to global alumni networks, professional careers coaching and a solid grounding in business fundamentals. In other words, an MBA could be a fast ticket up the greasy pole.

But the cost of an MBA is astronomical. Fees and living expenses are often more than US$200,000 a year at top US schools such as Boston’s Harvard, MIT Sloan and the Stanford Graduate School of Business in California, according to the 2018 QS Return on Investment Report. It’s little wonder then, that financing an MBA is one of the biggest considerations for prospective students, including the financial effect of not earning a salary during the course (up to two years).

Speaking from experience

Véronique Watelle graduated from France’s NEOMA Business School in 2017. Her MBA (which can be completed in seven, 10 or 15 months) was priced at €36,000 (US$41,800) but the total bill including accommodation and travel costs came to nearly €50,000 (US$58,000), she says. Yet Watelle says the return on investment has been very high, as she is a business developer at a software company, whereas previously, she held a product marketing manager role.

Watelle says, “Very early during the MBA, I was contacted by head-hunters offering me new professional opportunities like CTO, country manager, sales director and marketing director, with a salary range that I never would have imagined before.”

Aside from the job offers, Watelle says the MBA has helped her to work with globally diverse teams from France to Japan and Canada to Brazil: “The MBA program is highly focused on human issues, and personal and collective dimensions. Being immersed in a group of professionals coming from 15 different countries was a treasure trove. I feel totally augmented by my MBA experience.”

Decision time

Deciding whether it’s worth the cost is a subjective analysis, but salary increase is the most commonly used benchmark. On that metric, MBA candidates have plenty to cheer about. On average, the global 10-year return on investment (ROI) of an MBA is more than US$390,000, according to QS data compiled from 235 full-time MBA programs. That means people pay back the total cost of the MBA in 51 months, on average, globally, though the figures vary wildly by geography.

At Stanford, MBAs are earning salaries of US$140,600, though candidates tend to give up high salaries to study there. In comparison, alumni from IMD business school in Switzerland earn US$120,100, but they study for one year whereas Stanford’s course is double the length, meaning IMD grads forgo less earnings.

Being out of the industry for long periods of time can mean missing out on important developments, particularly in burgeoning sectors such as technology.

This is one factor thought to have contributed to the rise of one-year MBA programs in Europe, whereas the US prefers the two-year model. According to GMAC data, last year nearly two-thirds of US MBAs saw declines in applications, but three-quarters of European programs reported increases in application numbers.

Beating financial costs

Fortunately, more schools now offer financial aid, according to admissions consultant Stacy Blackman, who says the money pledged to her clients reached US$2 million last year. But when judging ROI, candidates should choose schools based on their specific career outcome.

Blackman says, “There’s no better example than one of our female candidates this past season. She received scholarship dollars to multiple top MBA programs, including a 100 percent scholarship to a M7 program. She declined the free tuition at two other programs ranging between US$100,00-$200,000, and instead chose Wharton, where she will pay the full tuition. The Wharton brand for her specific career path and ambitions was that valuable.

“MBA applicants are more concerned about MBA program brand now than ever before,” she says, explaining that rankings are important in determining ROI. “Brand does relate to ROI, it predicts those qualitative measures inherent to ROI, such as rigor of student peer group, enhanced legitimacy of the degree, and long-term professional networks.”

The bigger picture

MBA graduates will also have to consider how they can sell the ROI their potential employer can expect from their high salary. Jérôme Couturier, associate dean for professional graduate programs at NEOMA admits companies pay an “MBA premium”, but he says the MBA provides the skills students need to drive a company’s growth:

“Not only does the program develop their know-how in business fundamentals and give them a global [perspective], it also develops the set of soft skills necessary for participants to successfully take on more senior roles and become a driving force in the company - such as clarity of thought, strategic decision-making ability, problem-solving skills, cultural understanding of people and of situations, leadership abilities, and self-confidence.”

There are ultimately many ways to judge the value of an MBA, but the return on investment often goes way beyond the financials.